The Arizona House of Representatives voted 31-29 on Wednesday to pass a bill that will require app stores to allow app makers to use their own payment processing software, avoiding fees charged by Apple and Google.
The vote is a setback for Apple, which opposed it, and a victory for the Coalition for App Fairness, a group representing app makers pesky with app stores, which backed the bill.
The legislation still has many challenges to overcome before it becomes state law. First, the Arizona Senate has to discuss and pass the legislation. Then Arizona Governor Doug Ducey would have the option of vetoing the bill. If it becomes law, Arizona will have to grapple with questions including how Apple or Google will comply, or whether it would be challenged in court.
The vote comes weeks after the North Dakota state Senate voted against passing a similar bill.
The Arizona bill, HB 2005, targeted Apple’s fees by requiring companies that run app stores with more than one million downloads per year to allow apps to offer alternative payment processors, allowing them to Developers avoid fees that range from 15% to 30%. The bill would apply to Arizona businesses and users.
While the bill didn’t specify any company, it was clearly aimed at Apple’s App Store, which approves any app that runs on iPhones, and the Google Play app store for Android phones, which takes 30% of sales. of digital products of Android applications. . Discussion of the bill in the Arizona House focused primarily on Apple, with some discussion on Google. The bill exempted stores from digital software for game consoles or music players.
“I think they now have a monopoly on the market,” said Arizona Republican Rep. Regina Cobb, who sponsored the bill. “There is no one here who does not have a Google Android or Apple phone, I guarantee it.”
Other lawmakers opposed the bill on other grounds, including a rushed process, questions about whether it is a federal issue, and concerns that the legislation will be challenged in federal court because it could conflict with the United States constitution.
“Arizona has no interest in this fight,” said Arizona Democratic State Representative Diego Rodriguez. “We don’t have a dog in this fight, what we have to do is focus on policies that protect consumers. This bill does not protect consumers, it protects a billion dollar company from another billion dollar company. Dollars”.
Apple opposed the Arizona bill, and Kyle Andeer, Apple’s chief compliance officer, said in a hearing last week that it amounts to a “government mandate that Apple give away the App Store.”
“This would allow multi-billion dollar developers to take the entire value of the App Store for free, even if they are selling digital products, even if they are making millions or even billions of dollars doing so,” Andeer said.
Representatives for Apple and Google declined to comment.
The Arizona bill is the latest effort to regulate Apple’s App Store, which has come under fire for its strict rules and fees for digital purchases, which some software makers say are unfair and anti-competitive.
State legislatures have become a battlefield and similar legislation is being considered in states like Georgia and Minnesota.
The Arizona bill was endorsed by the Coalition for App Fairness, which includes software companies such as Spotify, Match Group, and Epic Games, who have become irritated under Apple’s control of their App Store and want Apple to cut their fees, open iPhones for alternative app stores. and allow alternative payment processes.
“The Coalition for App Fairness is pleased to see the passage of HB 2005 by the House of Representatives, which will foster business innovation in Arizona and protect consumer choice. While this is cause for celebration, it is only a first. step to achieve a truly level playing field all, “said Meghan DiMuzio, executive director of the Coalition for App Fairness.
Last year, Epic Games filed antitrust lawsuits against Apple and Google that are currently working in court, targeting many of the same issues, such as giving software makers the option to use their own payment processor.
In October, the House Judiciary Subcommittee released a report saying that Apple has “monopoly power” over iPhone applications, which it uses to generate huge profits.
In 2019, the Supreme Court ruled 5-4 against Apple in a case that opened up the possibility of consumer lawsuits against Apple’s app store for allegedly inflating app prices.
The scrutiny appears to be affecting Apple’s App Store policies. Late last year, Apple introduced a new program that lowered its App Store sales rate from 30% to 15% for businesses making less than $ 1 million per year on the App Store, addressing some complaints.